6 Tips for Pharmacist Entrepreneurs
Entrepreneurship has a strong history in health care.
Entrepreneurship has a strong history in health care. Nevertheless, we commonly think of that typical family practice physician as someone who has gone into business for his or herself.
In many parts of the country, the word “pharmacy” conjures up images of the corner drugstore and small-town apothecary shop. But, the reality is that health care is changing, and much like how corner grocery stores are being edged out by larger supercenters, pharmacist entrepreneurs are going to have to fight to stay relevant.
Now, it may not be as simple as deciding to go into business with a couple of your old classmates and buying out the store from a practitioner who was looking to retire. I’m not saying that it doesn’t happen, but in an age when limited networks, sky-rocketing drug prices in a volatile market, and uncertain reimbursements plague the pharmacy community, most independent practitioners would agree that things aren’t exactly easy for those exploring the option of self-employment.
For those who aren’t intimidated by the uncertainty that comes with entrepreneurship, here are a few things to keep in mind.
1. Don’t forget the risk in your business proposition.
Financial uncertainty is a tough thing to cope with. Why do you think so many individuals resign to have “professionals” manage their investments?
Even so, entrepreneurs need to embrace the risk that’s inherent to their pursuit. You’re not going to be guaranteed a paycheck, and that’s okay. The more you plan, the less risk you’ll have, and the less luck you’ll need to move forward.
2. Share the risk.
So, you have an idea that’s going to change the lives of patients. Is your new service going to change the way we look at pharmacy? Prove it by going “at risk” with your service proposals.
The health care pie isn’t getting any bigger, and if you want a bigger slice, you’re going to have to justify why you deserve it. This seems to be the biggest complaint I get from colleagues in the managed care industry.
Many pharmacists seem to expect payers to shoulder all of the risk and purchase a new service sight unseen. This is a significant obstacle for new and unproven vendors in the marketplace.
Yet, in an age when pay-for-performance and value-based payments are becoming the norm, there’s significant opportunity for those willing to delay cashing a paycheck until they’ve delivered on the quality and care improvements they promised. At this point, providers who have proven themselves have the ability to command a premium.
3. Solve a current problem in the marketplace.
I maintain that part of the problem with the advancement of pharmacy services is that we keep trying to tell the public what they should be interested in. Before we launch another cash-based medication therapy management clinic targeting patients instead of payers or physician groups, we need to verify that we’re actually addressing a need that’s present in the marketplace.
That’s not to say you can’t generate need through well-designed and implemented marketing techniques, but in an age when we’re conditioned to tune out ads on TV and social media, market generation isn’t feasible for the vast majority of startups. Until you’ve established yourself as a serious player in a similar market, it’s better to address concerns that currently exist in the system, rather than try to convince your customers to buy a product they were previously uninterested in.
This approach shouldn’t discourage you. There’s certainly plenty of room for improvement in the current health care system, and you will have a plethora of established problems to address.
4. Thoroughly plan out your idea.
I can tell you from experience that it’s far too easy to jump the gun when you’re thinking about a new idea and get started before you’ve established a viable business model. The last thing you want to do is to start working on a project and commit significant time and financial resources only to realize it won’t make any money.
Now, the PharmD is a clinical degree, and although there are a couple of basic management and administrative courses rounding out the pharmacy school curriculum, I’d argue that there’s a lot more to starting a business than most realize. Picking up some business skills (or a partner who has them) isn’t a bad idea.
Put together a pro forma, making sure you can construct a business framework that can (at least conceptually) sustain you and your business at a level at which you’re satisfied. Be reasonable and make appropriate estimates for the time and resources it’s going to take to get your idea off the ground.
5. Think about who’s going to pay you.
More than likely, the individual who’s going to ultimately benefit from your new business will be the patient. The individual cutting your checks, however, may not be the patient.
In the age of the Affordable Care Act, there’s an expectation that health care will be covered by insurers to some degree. If you can come up with a model that patients are willing to pay cash for, good for you!
The ability to generate enough interest from patients so they willfully part from their hard-earned money without the aid of health coverage speaks to the highly perceived value of what you’re offering. If this is not the route you’re taking, you need to think about why your business offers value to not only the patient, but also the payer.
A great way to get started with this is to develop a cost-benefit or cost-avoidance justification for your service and get familiar with the metrics on which health plans are evaluated. If you can solve a problem they’re currently having, then it’s much more likely that they will pay you to do so.
6. Vet your assumptions by consulting your target customer.
While you’ve been formulating ideas on why your customer is going to use your service, you’ve likely made a variety of assumptions. For example, if you’re putting together a service that’s intended to increase the performance of a physician’s quality metrics, you’ve made the initial assumption that the physician wants to improve those metrics.
In consulting target customers, however, you may discover that they may not actually be interested in your service. Or, perhaps you’ve stumbled upon a problem that isn’t worth solving in the face of other priorities, or at your asking price.
Let your customers tell you what they want instead of the other way around. This is a nice way to establish a customer base before you even get started, and having someone lined up to finance your new offering before it’s even on the market is a nice way to minimize the risk that’s inherent to the process.
There’s no shortage of opportunities out there in the current marketplace. Pharmacists are in a unique position to address serious problems such as medication nonadherence, limited access to therapy, and poor drug-related outcomes.
As you set out to change the world with your ideas, keep these points in mind and don’t cut corners. If you do your homework, your odds of succeeding in the competitive health care marketplace will improve significantly.